Social Europe

  • EU Forward Project
  • YouTube
  • Podcast
  • Books
  • Newsletter
  • Membership

Corporate taxation: financing state and welfare

Simon Vinge and Séverine Picard 21st April 2023

Trade unions in Sweden want a more equitable tax system, where companies compete on quality, not tax minimisation.

corporate,corporation,tax,Sweden,unions,minimum
A global minimum tax is a first step towards preventing company accountants gaming the system to pay as little tax worldwide as they can (photofriday/shutterstock.com)

Late last month, the Swedish federation of trade unions SACO hosted a seminar on global minimum taxes for European Union multinationals, in collaboration with the recently established Network of Unions for Tax Justice and the EU Tax Observatory. Amid the Swedish EU presidency influential policy-makers, including Sweden’s former finance minister as well as the head of the finance committee in the parliament, discussed with the unions ways forward on corporate-tax reform—in particular how Sweden intended to implement the recently adopted EU directive on a global minimum tax.

With more than 140 participants, the seminar was unusual by Sweden’s standards: tax debates tend to be low-key, generally focused on resisting co-ordination initiatives. Sweden usually expresses concerns about EU tax proposals, obstructing progress in a decision-making process which still requires unanimous agreement among member states.

‘National sovereignty’

In Sweden we often hear that EU proposals for corporate-tax reform would damage ‘national sovereignty’. It is also said that, as a capital-exporting economy, Sweden has a lot to lose from taxing its ‘national champions’.

But the sovereignty argument is deeply misleading. Lack of international co-operation has favoured tax havens within and outwith the EU. In its absence, countries compete against each other to attract capital with tax incentives and low rates.

Sweden has engaged in this ‘race to the bottom’, with the corporate-tax rate dropping from 28 to 20 per cent in a decade. The loss of revenues stemming from this collective-action dilemma costs workers and their communities a lot.

As highlighted in the SACO study ‘New times, new taxes’, between two and ten trillion Swedish krona (€2 to €8 billion) is lost every year globally to corporate-tax abuse. Sweden alone loses SEK130 billion (€11 billion) annually, mostly to Ireland, Luxembourg and the Netherlands. These almost unimaginable sums lost are desperately needed to maintain the social contract—given the expenses and debt incurred to deal with the pandemic, the energy crisis, the cost of living and the green transition.



Don't miss out on cutting-edge thinking.


Join tens of thousands of informed readers and stay ahead with our insightful content. It's free.



Draining liquidity

Corporate-tax avoidance hurts workers in many ways. Through complex mechanisms, companies drain liquidity from healthy subsidiaries to tax havens, leaving little left for trade unions to bargain over. Wages are thereby kept artificially low and working conditions precarious. Management is inaccessible behind a maze of shell and letter-box entities.

So trade unions are pursuing a co-ordinated agenda through the European Trade Union Confederation and the Network of Unions for Tax Justice. This gathers more than 30 trade unions across four continents, working together to convince their governments to engage in a virtuous race to the top, challenging austerity and ensuring a fairer sharing of corporate wealth with labour.

The adoption by the EU of a global minimum tax last December was a historic development. For the first time, governments in Europe and beyond have recognised that tax competition is not sustainable. The directive, drawn up in collaboration with the Organisation for Economic Co-operation and Development, means multinational enterprises must be taxed at a minimum of 15 per cent.

Excessively complex

Assessing how the EU global minimum tax will affect revenues in individual countries is an uncertain exercise. We do not yet know how businesses will react. The EU framework is however excessively complex and leaves many opportunities for tax havens to exploit its weaknesses through creative transposition into their domestic systems.

Among others, weaknesses include a narrow scope of application, an amputated tax base and a modest minimum rate. Countries in the global south are unlikely to sign on as the design of the rules puts them at a great disadvantage, compared with their OECD counterparts.

These concessions adversely affect the revenue-raising potential. In Sweden, a recent official report contrasted the administrative cost of the directive with its low domestic revenue impact. Policy-makers must however not be led to believe that global minimum taxes are not a worthwhile exercise: the directive must be strengthened, not cast aside.

Ambitious action

A 25 per cent effective corporate-tax rate is a longstanding labour demand to curb tax competition and raise more revenue more progressively. Rather than looking at ways to undercut their neighbours through poor and porous implementation, EU member states must aim at ambitious transposition of the directive, as well as complementary measures to offset its weaknesses. Ultimately, far-reaching national action will be decisive in building consensus for stronger multilateral reform.

The SACO seminar offered a glimmer of hope on the Swedish corporate-tax agenda. The representatives from the two major Swedish parties agreed that the political debate had shifted on this issue and that the pressure should be sustained for further progress.

Beyond the assertive rhetoric, the proof of the pudding is in the eating. Sweden has an important role to play and still months left to use its EU presidency to show the way forward to other member states. The seminar and union demands can hopefully play a pivotal role in its domestic debate and help Sweden stop acting as a messenger boy for tax havens when these issues come to the Council of the EU.

Simon Vinge
Simon Vinge

Simon Vinge is chief economist at Akademikerförbundet SSR in Sweden.

Severine Picard
Séverine Picard

Séverine Picard is head of Progressive Policies, a socially minded consultancy.

Harvard University Press Advertisement

Social Europe Ad - Promoting European social policies

We need your help.

Support Social Europe for less than €5 per month and help keep our content freely accessible to everyone. Your support empowers independent publishing and drives the conversations that matter. Thank you very much!

Social Europe Membership

Click here to become a member

Most Recent Articles

u4219834676 bcba 6b2b3e733ce2 1 The End of an Era: What’s Next After Globalisation?Apostolos Thomadakis
u4219834674a bf1a 0f45ab446295 0 Germany’s Subcontracting Ban in the Meat IndustryŞerife Erol, Anneliese Kärcher, Thorsten Schulten and Manfred Walser
u4219834dafae1dc3 2 EU’s New Fiscal Rules: Balancing Budgets with Green and Digital AmbitionsPhilipp Heimberger
u42198346d1f0048 1 The Dangerous Metaphor of Unemployment “Scarring”Tom Boland and Ray Griffin
u4219834675 4ff1 998a 404323c89144 1 Why Progressive Governments Keep Failing — And How to Finally Win Back VotersMariana Mazzucato

Most Popular Articles

u4219834647f 0894ae7ca865 3 Europe’s Businesses Face a Quiet Takeover as US Investors CapitaliseTej Gonza and Timothée Duverger
u4219834674930082ba55 0 Portugal’s Political Earthquake: Centrist Grip Crumbles, Right AscendsEmanuel Ferreira
u421983467e58be8 81f2 4326 80f2 d452cfe9031e 1 “The Universities Are the Enemy”: Why Europe Must Act NowBartosz Rydliński
u42198346761805ea24 2 Trump’s ‘Golden Era’ Fades as European Allies Face Harsh New RealityFerenc Németh and Peter Kreko
startupsgovernment e1744799195663 Governments Are Not StartupsMariana Mazzucato
u421986cbef 2549 4e0c b6c4 b5bb01362b52 0 American SuicideJoschka Fischer
u42198346769d6584 1580 41fe 8c7d 3b9398aa5ec5 1 Why Trump Keeps Winning: The Truth No One AdmitsBo Rothstein
u421983467 a350a084 b098 4970 9834 739dc11b73a5 1 America Is About to Become the Next BrexitJ Bradford DeLong
u4219834676ba1b3a2 b4e1 4c79 960b 6770c60533fa 1 The End of the ‘West’ and Europe’s FutureGuillaume Duval
u421983462e c2ec 4dd2 90a4 b9cfb6856465 1 The Transatlantic Alliance Is Dying—What Comes Next for Europe?Frank Hoffer

S&D Group in the European Parliament advertisement

Cohesion Policy

S&D Position Paper on Cohesion Policy post-2027: a resilient future for European territorial equity

Cohesion Policy aims to promote harmonious development and reduce economic, social and territorial disparities between the regions of the Union, and the backwardness of the least favoured regions with a particular focus on rural areas, areas affected by industrial transition and regions suffering from severe and permanent natural or demographic handicaps, such as outermost regions, regions with very low population density, islands, cross-border and mountain regions.

READ THE FULL POSITION PAPER HERE

ETUI advertisement

HESA Magazine Cover

With a comprehensive set of relevant indicators, presented in 85 graphs and tables, the 2025 Benchmarking Working Europe report examines how EU policies can reconcile economic, social and environmental goals to ensure long-term competitiveness. Considered a key reference, this publication is an invaluable resource for supporting European social dialogue.

DOWNLOAD HERE

Eurofound advertisement

Ageing workforce
The evolution of working conditions in Europe

This episode of Eurofound Talks examines the evolving landscape of European working conditions, situated at the nexus of profound technological transformation.

Mary McCaughey speaks with Barbara Gerstenberger, Eurofound's Head of Unit for Working Life, who leverages insights from the 35-year history of the European Working Conditions Survey (EWCS).

Listen to the episode for free. Also make sure to subscribe to Eurofound Talks so you don’t miss an episode!

LISTEN NOW

Foundation for European Progressive Studies Advertisement

Spring Issues

The Summer issue of The Progressive Post is out!


It is time to take action and to forge a path towards a Socialist renewal.


European Socialists struggle to balance their responsibilities with the need to take bold positions and actions in the face of many major crises, while far-right political parties are increasingly gaining ground. Against this background, we offer European progressive forces food for thought on projecting themselves into the future.


Among this issue’s highlights, we discuss the transformative power of European Social Democracy, examine the far right’s efforts to redesign education systems to serve its own political agenda and highlight the growing threat of anti-gender movements to LGBTIQ+ rights – among other pressing topics.

READ THE MAGAZINE

Hans Böckler Stiftung Advertisement

WSI Report

WSI Minimum Wage Report 2025

The trend towards significant nominal minimum wage increases is continuing this year. In view of falling inflation rates, this translates into a sizeable increase in purchasing power for minimum wage earners in most European countries. The background to this is the implementation of the European Minimum Wage Directive, which has led to a reorientation of minimum wage policy in many countries and is thus boosting the dynamics of minimum wages. Most EU countries are now following the reference values for adequate minimum wages enshrined in the directive, which are 60% of the median wage or 50 % of the average wage. However, for Germany, a structural increase is still necessary to make progress towards an adequate minimum wage.

DOWNLOAD HERE

Social Europe

Our Mission

Team

Article Submission

Advertisements

Membership

Social Europe Archives

Themes Archive

Politics Archive

Economy Archive

Society Archive

Ecology Archive

Miscellaneous

RSS Feed

Legal Disclosure

Privacy Policy

Copyright

Social Europe ISSN 2628-7641

BlueskyXWhatsApp